The worldwide market for contract research organisations is growing at more than double the rate of the pharmaceutical industry that is the CROs’ revenue base.
The contract research sector was worth $13.7 billion last year, showing growth of 15% compared with around 6% for the whole of the pharmaceutical industry, notes a new report from Biopharm Knowledge Publishing.
The report identifies two main reasons for the current CRO boom. One is that, following years of weak R&D pipelines, there are now more drugs in development. The improvement is especially marked in the phases closer to launch, when large-scale clinical trials are needed, the report says.
The other reason is that, with sales growth running at a low ebb, pharmaceutical companies are trying to cut costs. “One place where they can do it is development – it is cheaper and probably more effective to outsource clinical trials than to manage them in-house,” Biopharm adds.
Among other reasons given for the outsourcing of pharmaceutical development are:
- globalisation to organisations that are more widely dispersed in clinical development than the company itself;
- lack of internal capacity;
- lack of internal expertise, coupled with the availability in CROs of external expertise that cannot be found in any one pharmaceutical company;
- accelerating the drug development process by accessing more rapid patient recruitment in emerging markets;
- a deliberate policy of outsourcing specific elements of drug development (e.g., Phase I trials or animal toxicology);
- the need for a more flexible development team, which is incompatible with a large centralised R&D organisation;
- a desire for “truly strategic” relations with a CRO that encompass the transfer of internal personnel to the CRO’s workforce, thereby reducing the company’s fixed overheads.
These drivers will continue to apply “for some time yet,” fuelling growth of the major publicly quoted CROs in particular, predicts The Contract Research Annual Review 2006.
In terms of numbers, CRO growth really happened – and reached its peak – in the 1980s and 1990s, although 10 of the existing players in North America and 15 in Europe were founded prior to 1960, it points out.
Since then, volume growth of CROs “has slowed down in most of the world so that in many regions the number of new CROs equals the number of CROs that go out of business … Only in the developing areas of Eastern Europe and Asia are the numbers of CROs growing significantly,” the report says.